Hogs
Price action: February lean hog futures closed steady at $87.85, near mid-range.
Fundamental analysis: Lean hog futures today saw a pause after hitting a 3.5-month high on Tuesday. The premium futures hold to the cash hog and CME index suggest futures traders look for a higher cash hog market in the coming weeks.
The latest CME lean hog index is up 27 cents at $82.03. Thursday’s projected cash index price is up another 37 cents at $82.40. Tuesday afternoon’s five day rolling average cash hog price quote was $79.74. The noon report today showed pork cutout value up 94 cents at $94.41, led by gains in bellies. Movement at midday was 138.67 loads.
Technical analysis: February lean hog futures bulls have the solid overall near-term technical advantage. Prices are trending higher on the daily bar chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $90.00. The next downside price objective for the bears is closing prices below solid technical support at the January low of $83.775. First resistance is seen at this week’s high of $88.775 and then at $90.00. First support is seen at $87.00 and then at $86.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose 72 1/2 cents to $233.10, nearer the session high. March feeder cattle rose $1.70 to $359.375, nearer the session high.
Fundamental analysis: The live and feeder cattle futures markets saw some chart-based buying today as the bulls have stabilized prices after last Friday’s NWS-inspired sell off. Improved trader/investor risk appetite today also supported some better buying interest in cattle futures.
USDA today reported very light cash cattle trading so far this week at $233.00. The agency on Tuesday said last week’s cash cattle traded averaged $232.50, which was up 64 cents from the prior week average. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $1.42 at $366.18, while Select-grade gained $2.41 to $362.25. Movement at midday was good at 91 loads. The Choice-Select spread at midday today was plus $3.93.
Cattle producers in the Plains states are concerned about extreme cold in the northern Plains and a major winter storm in the southern Plains producing livestock stress.
Technical analysis: The live and feeder cattle futures bulls still have the overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $230.00. First resistance is seen at $2.35 and then at last week’s high of $237.55. First support is seen at today’s low of $231.225 and then at last week’s low of $229.25.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $350.00. First resistance is seen at $361.00 and then at last week’s high of $365.00. First support is seen at last week’s low of $353.65 and then at $350.00.
What to do: Cover corn-for-feed needs through February in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through March. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.